The fight for the most affordable entry-level banking account in South Africa has turned into a race to zero, with another contestant into the market, Spot Money, bringing a 6th zero-monthly fee choice to South African consumers.
Spot Money is a digital bank that arose from the rebranding of Virgin Money SA, offering app-based banking solutions with a linked debit card. It connects banks such as Discovery and TymeBank in being completely digital, without an excessive branch network or ATM to maintain.
It has no monthly account fee, which puts it on a level playing field with numerous other entry-level banks in the country.
With fifteen entry-level transactional accounts to browse and more coming, with Bank Zero expected to launch this year, we’ve separated a comparison between these accounts three essential factors:
- The amount it costs you to manage the account every month.
- How much does your bank charge you to deposit money into your account?
- How much do you get charged by your bank to withdraw money from your account?
The entry-level bank accounts in South Africa differ significantly in usefulness and form, with a few loan specialists offering more than one entry-level account. For instance, Nedbank has a straightforward account in its MobiMoney offering, which has no monthly fees. However, it does have restricted transactional capabilities.
These bank accounts are focused on minimal transactions, with limits set on the amount of money that can be processed every month. Keep in mind that many of these accounts additionally offer refunds and interest on positive balances, which offsets a considerable portion of the monthly transactional costs. These have not been considered here.
Additional advantages, for example, discount coupons, rewards programs, or added benefits like data or airtime, have additionally not been considered.
Discovery Bank doesn’t have an entry-level transactional account. For this reason, it has been excluded.
Monthly account management expenses for entry-level accounts have turned into a lightning rod for competition in this segment, with banks cutting cents off their monthly charges to undermine competitors.
Given the simple idea of most entry-level accounts, the monthly handling fee is rapidly becoming outdated, with new contestants rejecting the expense in its entirety.
While advanced banking and card payments are progressively turning into the standard in South Africa, for a significant part of the population, mainly those still in the entry-level banking segment, physical money is still essential. Indeed, even among upper and middle-income brackets, having physical money on hand is regularly a necessity.
Along these lines of withdrawal fees, how banks structure the expense of getting actual money out of your account has regularly been a sore point. Conventional banks have always depended on complex fee structures to cut however much they can off the highest point of any transaction. Yet, since Capitec spearheaded the fixed-fee withdrawal structure, this has nearly become the baseline for most banks.
Banks with local or own-brand ATMs (or retail partnerships like TymeBank does) reward clients for adhering to their systems with lower fees, and gaining access to your money at a non-partnered or competing outlet results in a more significant expense.
Deposits aren’t as simple as before. Instead of the more conventional methods for putting your money into accounts, such as depositing money at an ATM or in-branch, banking clients are now also able to deposit money through retailers and other forms of digital media.
This has prompted retailers to join forces with new players in the industry: Pick n Pay and Boxer till points are the ATMs for TymeBank, whilst Spot uses an ETF technique for ‘top ups’ intended for its accounts, where money is added via digital codes, or straight from other bank accounts.
In any case, for more common banks, ATM and branch deposits are still very much the mainstay. However, retail giants like Pick n Pay and Shoprite have also now added till-point deposits as a service.